1. CHAPTER 6 BUDGETING How Will You Use Your Money?
Economic Educatin for Consumers
4/13/2017
CHAPTER 6 BUDGETING How Will You Use Your Money?
WHAT’S AHEAD
6.1 Choose Financial Goals
6.2 Track Income and Expenses
6.3 Your Budget Worksheet
6.4 Create Your Budget for the Year
Chapter 6

2. LESSON 6.1 Choose Financial Goals
Identify your financial goals.
Explain how your goals might affect your family and community.
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3. Types of Financial Goals
Budget
Short-term financial goals
Long-term financial goals
Balancing short-term spending with long-term success
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4. Types of Financial Goals
Budget – A plan for dividing income among spending and saving options.
It can help you achieve more of what is important to you during your life span.

5. Types of Financial Goals
Short-term financial goals – things you hope to achieve in less than one year.
Long-term financial goals – things you want to achieve over more than one year.

6. Types of Financial Goals
Life-span goals - the most important things you hope to achieve during your lifetime.

7. Your Goals Affect Others
Your family and your goals
Your current family
Your future family
Your community and your goals
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8. Checkpoint 6.1
Why should your short-term goals fit in with your life-span goals?
Why do other members of a community benefit when individuals within that community achieve their life-span goals?
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9. Checkpoint 6.1 answers
Why should your short-term goals fit in with your life-span goals?
If a person’s short-term goals do not contribute to his or her life-span goals, it is unlikely that these goals will ever be achieved.
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10. Checkpoint 6.1 answers
Why do other members of a community benefit when individuals within that community achieve their life-span goals?
Other members of a community will benefit because individuals who achieve their life-span goals will be productive citizens in their chosen careers and spend income in that community, pay taxes, and not require public assistance.
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11. LESSON 6.2 Track Income and Expenses
GOALS
Describe how to set up an effective filing system for your records.
Explain the difference between fixed and flexible spending.
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12. KEY TERMS fixed expense flexible expense luxury good
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13. KEY TERMS fixed expense – Amounts you are committed to spend.
flexible expense – Amounts that you can choose to spend or not.
luxury good – goods that have special qualities that make them more expensive than alternative goods.

14. Keep Financial Records
Track your income
Track your spending
Establish a filing system
Effective record keeping
How to use financial records
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15. Checkpoint 6.2
Describe a filing system you could set up to keep records of your financial transactions.
How do fixed and flexible expenses affect your spending plan?
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16. Checkpoint 6.2 answers
Describe a filing system you could set up to keep records of your financial transactions.
A filing system needs to be . . .
comprehensive
easy to use
easy to maintain
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17. Checkpoint 6.2 answers
How do fixed and flexible expenses affect your spending plan?
Fixed expenses must be paid and therefore must be included in a spending plan.
Flexible expenses may be important, although not required, and should be included in a spending plan, but not to the extent that they prevent payment of fixed expenses.
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18. LESSON 6.3 Your Budget Worksheet
GOALS
Identify steps you should take to create a budget worksheet.
Explain common problems with budgeting.
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19. KEY TERM
budget worksheet – a planning document on which you record your expected and actual income and spending over a short time, usually a month.
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20. Create Your Budget Worksheet
Step 1: Create a worksheet
Step 2: Estimate your income
Step 3: Estimate your expenses and savings
Step 4: Record your actual income and expenses
Step 5: Calculate the differences
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21. Budget Pitfalls Few consumers have realistic budgets.
Some people get too specific.
Some people don’t predict the correct amount of their flexible expenses.
Some people lump too many expenses under miscellaneous.
Some people give up on budgets because they think budgets take too much time and effort.
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22. Checkpoint 6.3
What steps should you take to create a budget worksheet for yourself?
What are some problems people may encounter when trying to budget?
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23. Checkpoint 6.3 answers
What steps should you take to create a budget worksheet for yourself?
The best way to estimate future income and spending is to examine past income and spending.
Maintaining an accurate and complete record of income and spending will enable an individual to construct an appropriate one-month budget worksheet.
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24. Checkpoint 6.3 answers
What are some problems people may encounter when trying to budget?
People run into problems with budgets when they . . .
Are too detailed
Incorrectly predict the amount of flexible expenses
Lump too many expenses under the miscellaneous category
Fail to set aside time to maintain the budget
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25. LESSON 6.4 Create Your Budget for the Year
GOALS
Evaluate and adjust your budget worksheet.
Explain why consumers should create and update yearly budgets.
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26. KEY TERM
audit
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27. Evaluate Your Budget Worksheet
Adjust your spending
Make several plans
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28. Budgeting for the Year Review and adjust your budget Family budget
Relate your goals to your budget
Adjust to changing goals
Family budget
Planning together
Compromising
The budget cycle
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29. Sample Family Budget Food 9.8% Utilities 9.5% Entertainment 5.2%
Clothes 13.7%
Savings 5.0%
Car 12.8%
Home 44.0%
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30. Checkpoint 6.4
How should you adjust your budget worksheet to receive the greatest satisfaction from your income over time?
What steps should people take to create and update their yearly budgets?
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31. Checkpoint 6.4 answers
How should you adjust your budget worksheet to receive the greatest satisfaction from your income over time?
If your spending exceeds estimates, you can either adjust your spending estimates or change your spending habits.
You should choose whichever option best meets your life-span goals.
Completing several budget worksheets will show various spending and saving options and allow you to select the one that works best for you.
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32. Checkpoint 6.4 answers
What steps should people take to create and update their yearly budgets?
By reviewing your budget at least once a year, you can compare your financial plan with what actually happened.
You can also assess outcomes in light of any of your goals that may have changed.
With these evaluations in mind, you can make appropriate adjustments for your next year’s budget.
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